F2014.1 Team 1
Share The Warmth Homemade Candles The Venture Team: Share The Warmth Homemade Candles consists of three entrepreneurial students, Allie Wilson, Nick Iuliano and Greg DiSalvo. All three are senior Management students at James Madison University. Throughout the semester, three roles emerged in each of the venture start-up members. Nick took on the role of salesman. Throughout the process, Nick sold over 90% of our candles to friends and family members. He used his charm, the charitable cause behind the product, and the giving season to sell over 80 candles. Allie emerged as the main marketer, outreach, and designer behind the product. She reached out to the homeless shelter where the proceeds went to to market the candles. Because of this connection, she made a flyer and Google Form and sent it to the homeless shelter's coordinator to be sent out to their mailing list. Finally, Greg took charge of operations. He made and sent out surveys that captured the target market and their needs. By discovering the needs of our target market, the team was able to narrow down our choices and sell the best product possible. Innovation Questionstorming: The follow lists questions that STW asked throughout the semester about the product innovations: * What should we produce that people would be willing to buy during the holiday season? * Why do some homes not have any candles during the holiday season? * What if we made candles that were customized to fit the customers' needs? * What if we offered a variety of colors, fragrances and jars? * What if we reached out to our charity and asked for help marketing our product? * What form of payments will we be willing to accept? * Where should we purchase our materials to make the largest profit margin, while not jeopardize the quality of our products? Big Idea Hypothesis – For the middle-aged middle-class person who wishes to customize a candle for their home or a freind, SHare The Warmth Homemade Candles was created. Share The Warmth customized orders straight for the customer that allows customers to have exactly what they want, unlike other major candle sellers. Our solution is to fulfill the desire to have not your typical color-scent combination, giving the consumer exactly what htey are looking for. Key Innovations: Throughout the process, STW had product innovations, marketing innovations, and process innovations. For product innovations, STW started out with just a candle. First, STW offered the product to be gift wrapped. After a few weeks, ti was discovered that this wasn't as valuable to customers as we thought it was going to be. This option soon was not offered because we would have experienced a profit loss with only a few people wanting this option. Second, at the end of the product innovations, the candles had a logo put on them and a tag wrapped around the top describing the charitable gift they just pruchased. Marketing innovations kept changing throughout the semester. First, we decided to make a Facebook account for Share The Warmth, make business cards to be handed out, and market heavily through personal social media sites. After many attempts to get people to "Like" our Facebook account, we decided to focus our efforts and attention elsewhere. Allie reached out to the Open Doors' coordinator to help market our products. She promised to post about our products on the Open Doors Facebook page, officall website, and to send out a flyer to their mailing list. After many follow up calls and emails, the Open Doors' staff member didn't end up posting about our products. Lastly, each member has posted on person social media sights and help spread the word about our products to their friends and family members. Face to face advertising as well as personal social media posting was deemed the most successful because of the amount of candle orders that were placed through these two methods. Process Innovations helped up create our products more effectively and efficiently. A majority of candles were the same color and scent, which helped the process. Many were single orders, which slowed down candle making process. When more than one person was making the candle, it helped speed up the process. One person was in charge of weighing the wax, adding the color and fragrances, while the other person was in charge of cleaning in-between each candle. This sped up the process tremendously, allowing for more candles to be completed in one session. Early Adopters: The first consumers that we were able to sell our products to were our parents. They all offered to pay for a few candles to get our venture started. When we sent them our Google Form to place their orders, they came back with feedback about that process. With their feedback, we were able to make changes to our Google Form and how to pay for the product, making it easier and less confusngg for the consumer. Finally, after purchasing our products, they gave more feedback. Some tips were to supply lids for the jars, use less fragrance, and to cut down the amount of options. After we tweeked out product, sales skyrocketed. What we learned from the early adopters was that they weren't afraid to make criticisms of our products. If they didn't get exactly what they thought we were selling, they make sure we knew it. This helped us along the way to change up our marketing strategy a little more as well as make product changes. Resources: The resources for the product: * http://www.candlescience.com/wax/soy-wax * http://www.candlescience.com/containers/candle-jars * http://www.candlescience.com/containers/candle-jar-lids * http://www.candlescience.com/color/liquid-dye * http://www.candlescience.com/wick * http://www.candlescience.com/fragrance * http://www.candlescience.com/equipment The resources for ordering and payment: * http://goo.gl/forms/IWAwGDuHDO * mkt.com/share-the-warmth Final Business Model: ''' '''KEY PARTNERS: During our entrepreneurial venture, we had multiple key partners who helped us to achieve success. The most influential were Madison Barber (an aspiring graphic design artist at VCU), and the Open Doors thermal/homeless shelter in Harrisonburg. Through our interpersonal networks, we were able to get a logo designed free of charge. We were also able to team up with Open Doors for a charitable donation in order to give our candles a story behind them. We were successful in achieving our overarching goal of creating an innovative brand, and in doing so, we were able to sell candles as “Share the Warmth”, not simply a group of college students. VALUE PROPOSITION: The main value proposition that we delivered to our customers was customization. All of our candles were 100% made-to-order, with every component (jar shape,scent, wax color) being individually chosen by the consumer. This allowed our customers to express themselves and their creativity through their purchases, rather than the industry norm of simply offering a generically mass-produced jar, scent, and color combination. Additionally, during the holiday season many people seek out opportunities to give back to those less fortunate than themselves. Share the Warmth provided its customers with an alternative channel for charitable contributions, rather than the typical, exclusively monetary form of donation. COST STRUCTURE: Share the Warmth is a value driven organization that focuses on the creation of value rather than simply achieving the leanest possible cost structure. That being said, careful cost monitoring is essential for success. Raw material was by far our biggest expense, and this was largely affected by high transportation costs do to the weight of the wax and the fragility of the glass jars. The shipping costs alone accounted for 21.5% of our total expense. We were able to overcome this cost by buying our materials in bulk, as well as developing a very efficient operational process. This process allowed us to minimize our time of production, lag time between activities, and waste, therefore helping us to keep relatively good control of our costs. REVENUE STREAMS: Each one of our candles was sold for $12 a piece, with the option of available gift-wrapping for an additional $1. About 80% of our total transactions were done using the Square mobile reader or online marketplace, with the remaining transactions being completed through physical payments (cash & check). Through the use of the Square mobile reader, we were able to accept debit and credit card payments from anyone, anywhere, at anytime. The Square online ordering tool made it incredibly easy to accept debit and credit card payments even without face-to-face contact, and helped to keep all of our orders organized and easily referenced in one convenient location. KEY ACTIVITIES: After some early trial and error, we came up with what we believed to be the best, most efficient operational process. We then used this standardized, assembly-line type process to manufacture all subsequent orders. Although our manufacturing process was very standardized, it was in absolutely no way automated. Every candle was hand-made for that customer by one of our certified illumination engineers, and then subsequently hand delivered to the consumer. This added personal touch makes the customer feel valued, and not like just another order number. CHANNELS: Originally we had planned on using social media as our primary marketing tool; however, we realized very early on that this method was not going to be the most efficient or successful. After a reevaluation of our marketing plan, we were able to focus in on a new target market and a new channel through which to reach it. We ended up doing the large majority of our marketing and sales (and 100% of our deliveries) through face-to-face interaction. This interaction not only made the buying/selling process much more personal, but also eliminated the threat of ‘buyers being liars’. CUSTOMER SEGMENTS: After initially planning to target the JMU student market, we ran into early sales troubles. We soon shifted our efforts toward focusing on a new target market: Middle-class, middle age. This iteration turned out to be arguably the most important decision we made during the course of our venture. Our new target market turned out to be extremely lucrative, with our product’s simplicity, charitable connection, and gift-ability making it the perfect fit for our new market segment. KEY RESOURCES: At the beginning of our venture, we were able to fund our initial start-up costs through a combination of our financial assets, specifically profits from our previous T-shirt venture. We used these funds to purchase our raw materials and quickly transformed Nick’s kitchen into our manufacturing and storage facility. After some initial test runs and experimentation, we were able to identify and standardize our most efficient process. This process was a great resource to us as it helped to minimize our production time, lag time between activities, and unintended waste throughout the manufacturing process. Lessons Learned and Advice for Future Entrepreneurial Students: The main lesson we learned was that our target market wasn't what we thought it was going to be. We were hoping that colelge-aged students would be who we sold our candles to because that was the market that we knew the best. After no luck with this market, we began selling to middle-aged middle-class people. This is where we sold the majority of our candles. The advice we give is to fail quickly and learn your target markte's needs fast!